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Successful Socialism: Sweden

I thought this was a good fact-based article describing how heavy govt spending does NOT grow an economy.

When govt spending in Sweden hit 68% of GDP, it's economy went to 0% growth (for 5 years). It was also running govt deficits. At that point the govt acknowledged the problem & began "austerity" measures, among them reducing subsidies for health and dental care (how about that?). They also had very high taxes. It took them 12 years to get back down to their present rate of spending, 37% of GDP. The economy began to grow again when they got down to 49% of GDP. Taxes are now lower than they were during the low-growth period, growth is up, and they are running budget surpluses! Their tax rates are pretty much a flat rate across all income levels.

The conclusion here was:

Keynesians tell us that cutting government spending will slow economic growth. The exact opposite happened with Sweden. Once it started cutting spending, its economy started growing: 4% in 1994 and 3.9% in 1995. In the 18 years since it started cutting, Sweden's economy grew at twice its previous rate, even faster than the U.S.'s.

I think the article said that the total tax rate in Sweden is around 50%. If you look at the US, it gets pretty complicated.

Where I live: lets start with FIT at 15%. Then add 3% for state tax (other states are more) and 1% for local tax. That's 18%. Some large cities may have a higher "local" income tax. SS/Medicare since it's mandated, could be counted as an additional 7%. Property taxes are on top of that. There is a state sales tax of 6%. Food is not taxed in the grocery store ... unless you purchase prepared foods, like a hoagie at the deli counter. Clothing not taxed, but laundry detergent is. Basic soap is not taxed, but things like body wash (luxury?) are. It gets complicated! Then, of course, we have those other taxes like the taxes on gasoline and our phone bills and electric bills. Not really sure how the all these additional taxes were computed for purposes of the article.

G.Clinchy@gmail.com"Know in your heart that all things are possible. We couldn't conceive of a miracle if none ever happened." -Libby Fudim

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